Westpac Banking Corporation v Corry and Anor

History of Proceedings 3The present proceedings were commenced by Statement of Claim filed 3 February 2011. A Defence was filed on 4 May 2011. 4The proceedings were referred to me in accordance with the judicial directions hearing procedure under the Possession List Practice Note. To that end, the proceedings have been before me on 15 and 17 June 2011, 27 and 28 July 2011 and 26 August 2011. Until the lastmentioned date, the Defendants were unrepresented. 5On 17 June 2011, I made an order under Rule 14.28 UCPR striking out the Defence filed on 4 May 2011. Thereafter, the Defendants furnished a proposed draft Defence, in relation to which leave to file was sought, on 27 July 2011. 6On 25 July 2011, the Defendants filed a Cross-Claim in the proceedings.

The Plaintiff's Summary Judgment Application 7On 28 July 2011, I listed the hearing of the Plaintiff's summary judgment application for 2.00 pm on 26 August 2011. Mr Hynes of counsel appeared for the Plaintiff on that application. Ms Doust of counsel appeared for the Defendants. 8In support of the application, Mr Hynes read the affidavit of Stewart Anthony Meager sworn 11 August 2011 and tendered a folder of documents, Exhibit SAM1. Ms Doust read an affidavit of the First Defendant, Mr Corry, affirmed 24 August 2011. 9Mr Hynes submitted that the Plaintiff should have summary judgment on its claim for possession of land. No claim for monetary judgment is made by the Plaintiff in these proceedings. 10The evidence adduced by the Plaintiff demonstrated that monies were advanced to the Defendants which were secured by mortgage over the Norong property, and that there had been default under the mortgage. In these circumstances, Mr Hynes submitted that there was no arguable defence to the claim for possession. 11As the Plaintiff had adduced evidence in support of the claim for summary judgment, he submitted that the appropriate order was one under Rule 13.1 UCPR for summary judgment. Alternatively, as the earlier Defence had been struck out and no arguable defence had been demonstrated by the Defendants, he submitted that default judgment could be granted. 12Ms Doust submitted that the affidavit of Mr Corry affirmed 24 August 2011, disclosed an arguable foundation for the Defendants to resist the Plaintiff's claim for possession of the Norong property. Counsel referred to the content of a proposed Amended Cross-Claim (MFI1) which contained claims for relief by the Defendants against the Plaintiff for misleading and deceptive conduct within the meaning of s.52 Trade Practices Act 1974 (Cth) and unconscionable conduct within the meaning of s.51AC of that Act. The proposed Amended Cross-Claim seeks an order restraining the Plaintiff from exercising its power of sale over the Norong property and an order pursuant to s.87 Trade Practices Act 1974 (Cth) setting aside the mortgage, or varying the mortgage, to take into account the orders otherwise sought by the Defendants. 13Ms Doust submitted that the Defendants should be given an opportunity to file an Amended Defence which would reflect parallel claims to those in the proposed Amended Cross-Claim in resistance to the Plaintiff's claim for possession of the Norong property.

Applicable Legal Principles 14The applicable principles on a summary judgment application are clear. Before a Court will give summary judgment to a plaintiff, it is necessary for the Court to reach a high level of satisfaction that the order should be made. The principles are well known - a very clear case is required before summary judgment is granted and the power to order summary judgment should be sparingly employed: Dey v Victorian Railway Commissioners [1949] HCA 1; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129; Webster v Lampard [1993] HCA 57; 177 CLR 598 at 602-3; and Cosmos E-C Commerce Pty Ltd v Bidwell and Associates Pty Ltd [2005] NSWCA 81 at [37]-[38].

Determination 15I have considered the affidavit affirmed by Mr Corry on 24 August 2011 and the proposed Amended Cross-Claim (MFI1) so as to understand how the Defendants contend that they have an arguable Defence to the Plaintiff's claim for possession of land. Some Basic Facts 16It is necessary to refer to some basic and undisputed facts relevant to the application. 17By mortgage dated 22 October 2003 and registered with the Land and Property Management Authority New South Wales, the Defendants mortgaged the Norong property to the Plaintiff to secure the repayment of all monies which were or would become owing to them by the Plaintiff, together with interest thereon, as set out in the mortgage. The mortgage incorporated expressly the terms and conditions of the registered Memorandum of Common Provisions applicable to mortgages from the Plaintiff. 18On or around 3 November 2006, the Plaintiff provided financial accommodation to the Defendants in the form of an Equity Investment Loan for the sum of $570,000.00. The terms and conditions of this loan were contained in a Loan Offer Letter dated 2 November 2006 and the standard terms and conditions which accompanied the offer. 19On or around 27 July 2006, the Plaintiff provided financial accommodation to Corry Streat Pty Limited, as trustee to the Corry Streat Unit Trust, in the form of a Business Development Loan for the sum of $171,000.00. The terms and conditions of that loan were contained in a Business Finance Agreement dated 27 July 2006 and the General Conditions booklet which accompanied that loan. 20By Guarantee and Indemnity dated 27 January 2006, the Defendants guaranteed to the Plaintiff payment of all monies which Corry Streat Pty Limited owed to the Plaintiff then or in the future for any reason. The Guarantee was supported by the mortgage over the Norong property. 21There is no dispute that the Defendants have defaulted in their obligations to the Plaintiff under the relevant loan agreements and the mortgage, nor that demands were made by the Plaintiff to the Defendants, culminating in the commencement of the present proceedings on 3 February 2011. Basis for the Defendants' Proposed Defence 22The affidavit of Mr Corry affirmed 24 August 2011 and the proposed Amended Cross-Claim (MFI1) disclose the matters upon which the Defendants contend that they have an arguable basis to defend the Plaintiff's claim for possession of the property. That material reveals the following, which the Plaintiff has not had an opportunity to rebut on this application. 23In 1999, the Defendants moved from Sydney to Norong, purchasing the Norong property outright. 24From about 2003, the Defendants were engaged in the purchase of investment properties and other business activities. They proceeded over subsequent years to purchase a number of properties at Monto in Queensland with finance provided by the Plaintiff. The finance provided was secured by a mortgage over the Norong property. 25In about August 2006, a new manager became the Defendants' bank manager with the Plaintiff. It is alleged that representations were made to the Defendants by the manager in and after February 2007, which led to the Defendants not seeking to sell several of their Monto investment properties. 26The Defendants assert that they relied on the manager's advice and did not sell the Monto properties at a price which would have substantially reduced their indebtedness to the Plaintiff. The Defendants contend that reduction of that level of indebtedness at that stage would have enabled them to continue meeting other loan repayments and expenses until at least 2009/2010 or that, at the very least, they would have been in a much better position to refinance and protect the Norong property which was their home base. 27The Defendants contend that, later in 2007, they indicated to the manager that they would need to either sell properties or obtain further finance from the Plaintiff in order to make it through the 2008 year. The Defendants contend that the manager represented to them that they would be provided with finance the following year. 28The Defendants contend that, in February 2008, they received an offer to purchase the Norong property for $250,000.00. The Defendants contend that they advised the manager of the offer, asked for his advice, and indicated that they would need further finance from the Plaintiff to make it through 2008 if they did not sell the property and reduce their indebtedness. The Defendants assert that the manager advised them not to accept the offer, and reassured them that they would receive finance from the Plaintiff. 29The Defendants assert that, in reliance on the manager's statements, they refused the offer on the Norong property and that they incurred further expenses in expectation of receiving finance from the Plaintiff. 30The Defendants contend that the Plaintiff later denied them further finance, and then offered finance for a month. 31The Defendants acknowledge that they have defaulted on mortgage payments and were unable to meet ongoing costs required to run their business. 32The Defendants contend that, had they sold the Monto properties in 2007, they would not be in the position they are in today. Alternatively, the Defendants contend that they would not be in this position had they sold the Norong property in 2008, or both properties in those respective years. They also allege that, had they been given the finance they sought, they would not be in their current position. Assessment of Submissions 33I have expressed in relatively brief terms the basis upon which the Defendants assert that there is an arguable defence to the Plaintiff's claim for possession of land. A fundamental problem with the Defendants' argument is that they seek to attack or impugn the mortgage entered into and registered in 2003 by reliance upon representations said to have been made in and after 2006. The Defendants do not contend that the alleged representations were made in circumstances surrounding the entry into the mortgage. In my view, this is a fundamental problem for the Defendants on the present application. 34To the extent that the Defendants seek to rely upon a form of set-off by way of defence or cross-claim, I note that a cross-claim or set-off is not a defence to a claim for possession of land: Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; 126 CLR 161 at 165-167, 169; Horrobin v Australia and New Zealand Banking Group Limited (1996) 40 NSWLR 89 at 99-100. 35Ms Doust submitted that the principles expressed in Inglis v Commonwealth Trading Bank of Australia should be understood in the context where remedies are now available under the Trade Practices Act 1974 (Cth) which alter the legal landscape. She submitted further that Mahoney ACJ had observed in Horrobin v Australia and New Zealand Banking Group Limited , at 93, that it would not be proper to grant summary judgment where, under the general law, there was an arguable contention that the fraud of a bank would entitle a defendant to relief against the enforcement of guarantees and mortgages. Ms Doust sought to draw comfort from this statement in support of a submission that, in a similar way, the ability of the Defendants to rely upon defences in the Trade Practices Act 1974 (Cth) to the claim for the possession of land should stand in the way of summary judgment in this case. 36The Defendants have had an opportunity over some months to obtain legal advice and to frame their proposed Defence and Cross-Claim in a manner which reflects the case which they seek to present in opposition to the Plaintiff's claim for relief. I am conscious that the Defendants have only recently retained legal representatives who have gone on the record in the proceedings. 37I am satisfied that the Defendants' case as reflected in Mr Corry's affidavit of 24 August 2011 and the proposed Amended Cross-Claim (MFI1) points, at best, to a claim for damages only as an arguable claim by the Defendants. 38I do not accept Ms Doust's submissions concerning Inglis v Commonwealth Trading Bank of Australia and Horrobin v Australia and New Zealand Banking Group Limited . Those authorities continue to provide strong support for the Plaintiff's summary judgment application in the circumstances of this case. 39The way in which the Defendants seek to put their case does not provide an arguable basis for them to impugn the mortgage entered into in 2003 upon which the Plaintiff founds its claim for possession of the Norong property. I reach this view after applying the stringent test for summary judgment referred to at [14] above. 40I am satisfied that the Plaintiff should be granted summary judgment for possession of the Norong property.

The Plaintiff's Application to Dismiss or Strike Out the Cross Claim 41The Plaintiff also sought an order under Rule 13.4 UCPR dismissing the proceedings comprising the Cross-Claim filed 25 July 2011 or, alternatively, an order that the Cross-Claim be struck out. 42Mr Hynes submitted that the Cross-Claim was misconceived and contained no arguable claim given that the Defendants sought effectively to sue the Plaintiff for alleged loss when the Defendants themselves had had the benefit of the services provided by the Plaintiff. 43The stringent test for summary judgment referred to at [14] extends to an application for summary dismissal as well. Although there is some force in the submissions of Mr Hynes with respect to the substance of the Cross-Claim, I am not persuaded that the Cross-Claim is so flawed that an order for summary dismissal ought be made. 44Nor am I satisfied that the Cross-Claim filed 25 July 2011 ought be struck out under Rule 14.28 UCPR. 45It will be a matter for the Defendants to determine whether they wish to seek leave to further amend the Cross-Claim filed 25 July 2011 in the form of the proposed pleading in MFI1 or otherwise.

Appropriate Orders in the Context of the Case 46The Plaintiff has already obtained possession of four properties owned by the Defendants at Monto in Queensland. This has occurred recently. It appears that steps being taken by the Plaintiff to sell the Monto properties are still in their early stages. 47Mr Hynes submitted, with some justification, that the practical reality surrounding the present litigation appeared in paragraph 66 of Mr Corry's affidavit affirmed 24 August 2011, where he said: "Wendy and I wish the properties in Monto to be sold off in satisfaction of our mortgage debt in preference to [the Norong property] , which is our residence. We currently carry out our business of distributing Performix products from that property. All of those properties are vacant and do not generate any rental income." 48Mr Hynes informed the Court that it was the Plaintiff's expectation that a shortfall would remain in the Defendants' level of indebtedness to the Plaintiff, even if all the Monto properties and the Norong property were sold. He was not in a position to provide precise figures, said to be based on valuations, for this purpose. 49Ms Doust informed the Court that it was the Defendants' hope (if not expectation) that sale of the Monto properties may see the discharge of the Defendants' full indebtedness to the Plaintiff. 50The obligation of the Court is to facilitate the just, quick and cheap resolution of the real issues in dispute in the present proceedings. In my view, the Plaintiff has demonstrated a clear and proper foundation for summary judgment for possession of the Norong property. 51Whether the Defendants wish to press a claim for damages against the Plaintiff by way of Cross-Claim is a matter for them, and I will not deprive them of the opportunity to do so. 52However, it seems to me that a measure of finality can be achieved in the present litigation, whilst at the same time allowing some opportunity for sale of the Monto properties to determine whether the Plaintiff needs to take possession of the Norong property to enforce its security. 53I propose to grant the Plaintiff summary judgment for possession of the Norong property and to grant leave for the Plaintiff to issue a writ of possession in relation to that property. However, I will stay the execution of the writ for a period which I will determine after hearing the parties on that question. 54I will hear the parties as well on the question of costs given the point which has been reached in these proceedings. I note that the Plaintiff seeks an order that the Defendants pay the Plaintiff's costs of the proceedings on an indemnity basis, in reliance upon contractual provisions contained in the mortgage and loan documents. 55I make the following orders: (a) I give judgment for the Plaintiff against the Defendants for possession of the land comprised in Certificate of Title Folio Identifier XXX being all of the land situate at and known as XXX Road, Norong, New South Wales; (b) I grant leave to the Plaintiff to issue a writ of possession in relation to the property referred to in the preceding paragraph; (c) I decline to make an order dismissing or striking out the Cross-Claim filed 25 July 2011; (d) I will hear the parties with respect to a stay and the question of costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 September 2011